Three Scenarios for Hong Kong’s New Chief Executive

Carrie Lam is the Chief-Executive-elect of Hong Kong as a result of the territory’s hermaphroditic electoral system, in which she won 777 votes from the 1,194-member election committee, a collection of tycoons and pro-Beijing special interests.

“She is a Hong Kong lady. Ruthlessly pragmatic, mercilessly efficient,” says an intimate observer of politics in Hong Kong. However, many ask bluntly: Is she up to the task?

Lam’s future performance is a matter for…the future. Extrapolating from her actual duties, speculating based on her initial statements or promises made during the campaign, or even inferring from what is known about her personality, is a difficult task – and maybe not completely fair to her. But still, most people ask what she will bring to the fragrant harbor? Three possible scenarios:

The first scenario can aptly be called “more of the same.” In this scenario, which is the most probable, Lam will just continue the actual policies and style of her deeply unpopular predecessor, Leung Chun-ying. After all, she is his lieutenant. She will most likely act as a transmitter and implementer of Beijing’s wishes. And that she will do pragmatically and efficiently. She will rely on China, the pro-Beijing-camp in Hong Kong and the business realm – which constantly urges local politics not to upset the Mandarins in the north. Maybe Lam will even engage in some symbolical acts showing that she cares. Examples of these might be more education-related spending, more management of the prices in real-estate and rents, or even the occasional basket of rice.

The second scenario is “the phoenix and the dragon.” It is extremely unlikely, but it is still possible that Lam cares enough to honor some or all her promises. In this case, hers would be an active government. For example, she could engage more with the legislative and hear its diversity of opinions. She could even take the other branches of government seriously. Another area of activity – not positive to all accounts – would be the expansion of the social safety net, even giving the government a larger role in the economy.

A third component of this scenario could be her bridging social and political differences in Hong Kong by introducing more channels of democratic participation. In this scenario, her political allies would be increasingly the whole of Hong Kong politics. If she isn’t outright localist, Beijing can play along. And if it does, there will be no opposition from the business realm.

“Splendid isolation” is the third scenario. Some commentators attributed pure egotism to Lam – and fear it. From a free-market perspective, however, this might be a good scenario. If Lam is content with being chief executive instead of acting as such – if she just seeks the limelight but frowns on any actual task – that might be the tacit return to “positive non-interventionism.”

Of course, she would not earn any accolades in Hong Kong and Beijing might be discontent. But if she sees this as the last posting in her career, a posting full of glamour and void of ardor, she could even withstand this. And it could even turn out as the best case in an already overly managed economy.

Wait and see.

Henrique Schneider is chief economist of the Swiss Federation of Small and Medium Enterprises. He can be reached at hschneider@gmx.ch